Tesla (TSLA) Stock Faces Major Downgrades Amid Delivery Concerns and Brand Challenges
March 21, 2025 – Tesla (TSLA) stock has taken a significant hit in 2025, with Wall Street analysts cutting delivery estimates and expressing concerns over the company’s future growth. Morgan Stanley analyst Adam Jonas, a longtime Tesla bull, is the latest to downgrade expectations, citing rising competition, an aging vehicle lineup, and negative brand sentiment as key factors.
Morgan Stanley Cuts Tesla Delivery and Earnings Estimates
In a new research note, Jonas slashed his 2025 earnings per share (EPS) estimates for Tesla by 20%. Despite the revision, he still sees Tesla as a top pick with a potential 75% upside to $410 per share. However, he warned of significant volatility ahead.
“Given the upcoming catalysts and Tesla’s trading history, we see scope for the shares to test our $200 bear case and our $800 bull case within the next 12 months,” Jonas stated. He pointed to a range of factors affecting Tesla’s stock, including macroeconomic conditions, geopolitical issues, competitive pressures, and management decisions.
Tesla Stock Plunges as Sales Decline Globally
Tesla stock has been the worst-performing among the ‘Magnificent Seven’ tech stocks this year, plummeting 42% year-to-date.
The decline follows weak sales figures:
- China: Tesla sold just 26,677 vehicles in February, marking an 11.16% year-over-year decline and a 20% drop from January, according to the China Passenger Car Association.
- Australia: The Electric Vehicle Council reported a 72% year-over-year decline in Tesla sales for the month.
- United States: Demand has softened, with prices for used Cybertrucks, Model 3s, Model Ss, Model Ys, and Model Xs falling. Increased EV competition from General Motors (GM) and Ford (F), as well as a shift toward hybrid vehicles, has pressured Tesla’s market share.
- Political Backlash: Tesla’s brand is also under fire due to CEO Elon Musk’s ties to the Trump administration and the Department of Government Efficiency (DOGE). Protests and vandalism targeting Tesla dealerships and charging stations have escalated.
Wall Street Analysts Turn Bearish on Tesla
Several analysts have issued warnings about Tesla’s outlook:
- Mizuho reduced its Tesla delivery estimates this week, citing concerns over geopolitical risks and Musk’s political affiliations.
- UBS reiterated a Sell rating, citing demand concerns and increased competition.
- Insider Selling: Tesla executives have reportedly sold over $100 million worth of Tesla shares in the past month, according to Yahoo Finance data.
Tesla’s Upcoming Challenges: Robotaxis and New Models
Tesla has several key events on the horizon, but analysts warn that expectations may not be met:
- First Quarter Earnings Risk: Guggenheim analyst Ronald Jewsikow cautioned that Tesla is heading for a negative Q1 delivery report and declining gross margins.
- New Model Launches: Some analysts believe Tesla’s new models may fail to significantly expand the company’s addressable market.
- June Robotaxi Launch: Musk has promoted Tesla’s autonomous robotaxi project, but Jewsikow warns that the launch could underwhelm investors, especially as competitors like Waymo scale up.
“Tesla stock has seen momentum up and momentum down, and we expect the near-term trend to remain negative,” Jewsikow concluded, maintaining a Sell rating on the stock.
Looking Ahead: Can Tesla Rebound?
Despite the current downturn, Tesla remains a major player in the EV industry, and its long-term success will depend on regaining consumer trust, expanding its product lineup, and successfully launching autonomous vehicle technology. Investors will closely watch upcoming earnings reports and product rollouts to determine whether Tesla can reverse its stock slide and reclaim its position as an industry leader.